The full monty

Priming CIMB Bank for regional economic integration, Nazir Razak is betting big on Asean

Rebecca Foster
September 2, 2013

Priming CIMB Bank for regional economic integration, Nazir Razak is betting big on Asean

By Rebecca Foster
Understanding the region’s diversity is the key to success for Asean businesses, says Nazir Razak, group CEO of Malaysia-headquartered CIMB banking group.

The full monty
Born in Malaysia, Nazir Razak is the youngest son of Malaysia’s second prime minister, Tun Abdul Razak, and brother of current prime minister, Najib Razak. Educated primarily in the UK, Razak has a Masters in Philosophy from the University of Cambridge

“We have a good track record of integrating different people, different corporate cultures and different banking disciplines,” said Razak.
The bank, Asean’s fifth largest by assets, has 13.5 million clients, 42,000 staff and 1,080 retail branches across the region. Razak hopes that CIMB will reap the rewards of this reach when the Asean Economic Community – targeted for 2015 but likely delayed until 2020 – materialises. With a combined market value of $2 trillion, a figure tipped to balloon to $10 trillion by 2030, Asean is flagged as one of the world’s most promising trading blocs, providing ample fodder for banks looking to tap a population of 600 million.
“You can tell when Asean is hot because the global investment bankers move there,” said Razak, adding that CIMB’s investment arm is expanding into China, India and the US. “Asean is now attracting the A-teams from global investment banks, whereas not so long ago most of the A-teams were in China.”
Formerly an investment bank, CIMB has strengthened its regional foothold by embarking upon a series of bank and securities acquisitions over the past eight years, including Singapore-based GK Goh Securities and Thailand’s BankThai. When it acquired Malaysia’s Bumiputra-Commerce Group in 2005 and Southern Bank in 2006, CIMB began offering a wider range of banking services as part of its bid to rebrand itself as a trusted Southeast Asian universal bank. Last year, the bank acquired some Asia-Pacific units of the Royal Bank of Scotland, and by the end of 2012, CIMB recorded net profits of $1.3 billion.
“Asean needs strong regional players as pillars of the integrated Asean economy in the long term,” said Razak. “That’s what we are building and that is also why we have aligned our brand so strongly with Asean.”
It is a region home to one of the world’s largest concentrations of Muslims, and Razak sees much potential in the growth of Islamic banking in Southeast Asia. Assets in the global sector have grown to $1.5 trillion and are expected to reach $2.5 trillion by 2015. While this represents less than 1% of global banking assets, the growth rate has remained at 20% over the past four years.
With Malaysia remaining one of the world’s largest markets for Islamic banking, CIMB Islamic, its Shariah arm, gained an early move advantage when it launched Islamic bonds in 2003. Last year, its Islamic financing assets grew 22% to $11 billion.
“We have also rapidly developed an Islamic consumer banking franchise and offer all our clients Shariah compliant alternatives to the products they want,” said Razak.
Islamic finance, like other facets of the region’s banking sector, is likely to gain from regional economic integration. While 70% of the AEC blueprint is complete, most of the difficult areas of reform – non-tariff barriers and services – remain.
“Whether AEC arrives in the ‘full monty’ in 2015 is not that critical. We have always factored in that it was rather ambitious,” Razak said, adding that CIMB will be ready to capitalise on investment and trade interest in the region. “Compared to global banks, we think that we can catalyse more intra-Asian flows because we are Asians marketing Asia.”
Also view:
“Building blocks” – Are cash-rich pension funds the answer to financing Asean’s massive infrastructure upgrade?
“The female factor” – Women are increasingly taking their seats in Southeast Asia’s boardrooms – a vital development if impressive economic expansion is to continue
“The next big things” – With ANZ establishing a presence in Myanmar this month, Grant Knuckey is investing his expertise in the region’s most exciting markets
“Back to the future” – Harald Link of B.Grimm Group will lean on his company’s rich history in Thailand as the conglomerate goes  regional
“Better with age” – Chivas Brothers’ James Maxwell hopes to capitalise on Southeast Asia’s burgeoning love affair with Scotch whisky

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